Degen's 12/14 Blog

[Sniper]

Weak Tight?...

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I've been doing a lot of thinking the last couple of months about money management and poker and investing and the like. In July I started dumping all excess funds, including a large portion of my playing bankroll, into Ameritrade and buying stocks. I bought Google and Apple and made over 40% on my money in about 5 months. So naturally I was feeling like I had a bit of stock picking talent and was getting fired up about investing, and then I started doing more research on it. I've read several books on the topic recently and spent quite a bit of time on a couple of trading forums. If there is one thing I have learned from my studies thus far, it is that I don't know squat. I got lucky. I bought into the Google hype and took a tip from a friend who got his tip from yet another friend. Either of these could have easily gone south on me and the fact that I made any money at all was attributable only to luck and my own ignorance.

I have since closed out my positons and have gone to cash. ING Direct is giving 3.75% right now and thats better than the -ROI I probably have if I trade the market, so I'm going with that. And I'm going to feverishly keep studying the markets.

I credit Ed Miller (the 2+2 author) with being the main catalyst for this change in strategy, and for opening my eyes. He went to MIT and worked at Microsoft before becoming a professional poker player. He is an author and one hell of an intelligent person. He told me that he is completely in index funds now because HE doesn't know enough yet to be in the market as a winner. He's right, there are a ton of very intelligent people who devote their entire day picking apart companies and news stories etc etc etc. The average man putting his money in the market without a great deal of study is doing not much more than a guy in Vegas putting it on black.

My main concern here is my long term well being and that of many other poker players who I know that are making an extraordinary income for their age bracket, or for any age bracket. One friend is putting a huge chunk of his funds with a currency trader he has never met. Another is buying a condo (in this market!). I've heard of another keeping 6 figures in cash because he is afraid of paying taxes on it. Another has a blog dedicated to 'Rediculous Expenditures', shedding light on the spending habits of some successful poker players. The list goes on and on and on.

Yes this boom is paying off fantastically well for many people, but we need to collectively get our financial IQ's up and make smart decisions. I'd sure like to make the right moves and retire on passive income at a far too early age. I think many others have the ability to do this as well, but they also have the chance to have nothing more than a cool story to tell and a failed college degree to show for this period.


Reccomended reading:

Rich Dad Poor Dad: Kiyosaki
Teaches how the super rich view money and investments, and the
mistakes the poor and middle class make. Excellent, excellent book.

The Millionaire Next Door
Washes away many of they myths about how 'rich' people behave.

The Intelligent Investor: Graham
Investment classic. Warren Buffet called it the most important
book on investing he ever read. Need I say more?

How to Make Money in Stocks: O'neil
Despite the cheasy cover, its a great book on valuing stocks and companies.


Thanks for reading, now get back to MAKING MONEY!!!


Wild Bill

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[Dan Mezick]

Sniper,

This post from WildBill (and others like it) simply point to an awareness of ignorance and how much still needs to be learned.

After reading a few of these posts, it has become painfully obvious that what these successful young players need is a relationship with a Certified Financial Planner (http://www.fpanet.org/plannersearch/plannersearch.cfm). These CFPs craft customized plans, track results and make adjustments each year. They also provide some detachment. The young winning players need to get this message.

… “I can’t tell you how it came to take me so many years to learn that instead of placing piking bets on what the next few quotations were going to be, my game was to anticipate what was going to happen in a big way.” -Jesse Livermore

[Degen]

first i'll say that i am honored that the two of you checked out my little blog (http://grindblog.blogspot.com)

then i'll let Ben speak for me on this one:

"Let us ignore human nature at this point. Finance has a fascination for many bright young people with limited means. They would like to be both intelligent and enterprising in the placement of their savings, even though investment income is much less important to them than their salaries. This attitude is all to the good. There is a great advantage for the young capitalist to begin his financial education and experience early. If he is going to operate as an aggressive investor he is certain to make some mistakes and to take some losses. Youth can stand these dissapiontments and profit from them. We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgement on price versus values with the smallest possible sums

Then we return to the statement, made at the outset, that the kind of securities to be purchased and the rate of return to be sought depend not on the investor's financial resources but on his financial equipment in terms of knowledge, experience, and temperment."

-Benjamin Graham, The Intelligent Investor, pp 59-60

[buffett]

Wow. Awesome.

The first time I saw this thread, I read the opening 2 statements from the blog and then closed it and moved on to the next thread. After another exchange with degen, I came back to read it for real this time and there are some great nuggets in here. Here are my favorites:

"[Ed Miller] went to MIT and worked at Microsoft before becoming a professional poker player. He is an author and one hell of an intelligent person. He told me that he is completely in index funds now because HE doesn't know enough yet to be in the market as a winner."

"If there is one thing I have learned from my studies thus far, it is that I don't know squat. I got lucky."

Wow...great for you that you can admit this to yourself, and helpful for everyone else as an example. Congratulations.

[Maulik]

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He told me that he is completely in index funds now because HE doesn't know enough yet to be in the market as a winner."

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I too am an intelligent person and beleive I told you about this!

[Degen]

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He told me that he is completely in index funds now because HE doesn't know enough yet to be in the market as a winner."

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I too am an intelligent person and beleive I told you about this!

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Sure, a lot of people have. Ed just kind of tipped the scales a bit I guess.

My route to putting the least amount possible in is going to be NOTHING...i'm gonna pwn this stock competition and see what i can learn.

[AceHigh]

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Weak Tight?...

[/ QUOTE ]

Yeah...did he really sell all his GOOG?

[ QUOTE ]
I credit Ed Miller (the 2+2 author) with being the main catalyst for this change in strategy, and for opening my eyes. He went to MIT and worked at Microsoft before becoming a professional poker player. He is an author and one hell of an intelligent person. He told me that he is completely in index funds now because HE doesn't know enough yet to be in the market as a winner.

[/ QUOTE ]

Being smart and doing well in the market aren't directly correlated. It's like being smart and being good at poker, it helps, but you don't have to be the smartest person at the table to be the (one of the) best player.

[Degen]

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Yeah...did he really sell all his GOOG?


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yes, i had a stop-loss at 410, never bought it back

[shagjohn]

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Reccomended reading:

Rich Dad Poor Dad: Kiyosaki
Teaches how the super rich view money and investments, and the
mistakes the poor and middle class make. Excellent, excellent book.


[/ QUOTE ]

I recommend against Kiyosaki's book. Here's a review (http://www.johntreed.com/Kiyosaki.html) that's been well researched. According to the research, there was no 'rich dad', he doesn't own more than like 1 or 2 properties, and some of the stuff he recommends is unethical and at worst illegal. As far as a "woohoo you can do it b/c anyone can!" cheerleading book, it's great I suppose.

The other books look great though! /images/graemlins/smile.gif

My $.02...

[Degen]

[ QUOTE ]
[ QUOTE ]

Reccomended reading:

Rich Dad Poor Dad: Kiyosaki
Teaches how the super rich view money and investments, and the
mistakes the poor and middle class make. Excellent, excellent book.


[/ QUOTE ]

I recommend against Kiyosaki's book. Here's a review (http://www.johntreed.com/Kiyosaki.html) that's been well researched. According to the research, there was no 'rich dad', he doesn't own more than like 1 or 2 properties, and some of the stuff he recommends is unethical and at worst illegal. As far as a "woohoo you can do it b/c anyone can!" cheerleading book, it's great I suppose.

The other books look great though! /images/graemlins/smile.gif

My $.02...

[/ QUOTE ]

we had a good thread on here awhile back about it

i didn't use it as a real estate manual, it was the cheerleading and money management stuff

if you have a strong background in this, great...skip it. but his point is a good one, most people do not. most people are financially clueless. for those of us who were not given the proper tools with which to manage and build wealth, the book is an excellent primer and eye opener.

[lastsamurai]

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How to Make Money in Stocks: O'neil
Despite the cheasy cover, its a great book on valuing stocks and companies.

[/ QUOTE ]
Also read how to make money selling short by william o'neil. A must read!
And Market Wizards...one of my favs...